Is is as simple as ....."The economy is doing lousy?". Actually, yes it is. Of course, there is that technical defintion used by the economists and the scholars; Many(non economists and scholars) are now referring to it as an economic collapse.

This occurs when there is a significant decline in the economy which usually lasts for months. This is visible in terms of consumer spending, employment, industrial production, real income and wholesale trade. A technical indicator of this is 2 consecutive quarters or six months of negative growth which is measured by the country’s GDP or gross domestic product. For the National Bureau of Economic Research (NBER), “recession is a significant decline in economic activity lasting more than a few months”.

An economic recession cycle typically lasts 16 to 18 months, and the last time the United States was technically in a recession was during 2000-2001. Any recession which only lasts a short time(10-12 months), is instead typicaaly referred to as an "economic recession"

Make no mistake, we are now in an economic recession

What Causes an Economic Recession

What causes recessions to happen? There are complex reasons as well as simple reasons why economic recessions happen. John Maynard Keynes states that there are “animal spirits” which exist as driving elements for a recession. “Animal spirits” could be confidence, uncertainty, and pessimism. These “animal spirits” prevent objectivity and quantitative thinking. An example where these “animal spirits” taking over, is when consumers lose interest in products, services and outputs. On the eve of an economic recession, there will be overproduction. Supply will exceed the demands for products and services. This typically pushes companies to increase prices and consumers consequently lose confidence and retract their purchasing of non-essential products. A good example of this "animal spirits" element driving a recession was the psychological impact that the events of the September 11, 2001 attacks on consumers across the nation. This period of time was the last period in which our country was immersed in a recession.

Some economists suggest that recession may not only be caused by events that have large or huge impact on the people. Events that hurt particular companies or industries can also cause recession. Major innovations or change in a price of a major component needed in the completion of the product can have dramatic effects on some firms. These may cause reduction of workers or production.

Overconsumption can also be a cause of recession. Spending more that what is necessary may often lead to recession and, sometimes to poverty. An example of this is the extraordinary expenditure of the United States for the Iraq war. Economists are saying that the United States should be more careful with their consumption in the future, as resources that would have otherwise found their way into our mainstream economy instead went overseas in the form of war spending.

Government economic policies can be used to avoid economic recession. But failure to provide good economic policies can lead to recession, and strong thoughtful policies accompanied by careful execution can lead to an economic boom. Another issue is that the policymakers themselves are not attentive enough to see clearly the increasing signs of inflation or the early onset of a recession. Policymakers often times regard the onset of recession as just a slow economic growth that will correct itself. However, like in our current situation, failure to address the economic warning signs leads to more significant economic turmoil(ie...our current economic collapse). Economic recession is not just a problem in theUnited States . The United Nations sounded an alarm that there might be a global economic recession as early as January 2008. According to United Nations, world economic growth for 2008 is estimated to be at just 3.4 percent, continuing to trend downward since 2006 (3.9 percent) and 2007 (3.7 percent).

The bursting of the housing market bubble in the United States and the unfolding credit crisis in other countries are two of the major factors responsible for the world's global recession. Currently, Latvia, Estonia and Lithuania are all at risk of falling into economic recession due to the current global credit crisis.

To summarize, economic recession can be brought about by external as well as internal economic shocks and widening imbalances in the economy. We are currently in the middle of this economic cycle and it will take good policy, patience, and flawless execution by the incoming administration to start our march towards normalization.

What Do I Do Now?

2 Things

• Visit and take advantage of the library of recession related info at our site...Economic-Recession.info
• Take advantage of our research and insight, and introduce yourself to the top recession busting tool that we have been able to identify....Maverick Money Makers